Small Farmers. Big Change.

As a result of a reader’s comment to the previous story, I’ve decided to write a new entry which attempts to further highlight what is so important about small farmer co-operatives and what the differences are between companies who see farmers as partners and those who see them as suppliers.

The questions he asks give me another chance to talk about a group of farmers that has really inspired me and helped renew my conviction that the path we are on – weaving together good business strategies that support urgently needed social change – is absolutely the right one.

To me, the power of this story is in how clearly it illustrates the clash between two world views: the organizational development strategy of a coffee producing co-operative of small-scale farmers and the buying strategy of a large, multi-national coffee company. At Equal Exchange, we believe that these world views don’t have to clash. In fact, we built our organization on the belief that the success of our farmer partners – and our U.S. partners – is also our success.First, let me just say that my information comes only from CESMACH – what I’ve read and what the farmers have told us during our visits. Regarding the extent and nature of pressure, the farmers say that the company insisted that the co-operatives deliver their coffee to a third party, Agro Industries of Mexico (AMSA) rather than permitting them to continue to process and export the coffee themselves.

Why would the company insist on this change? Again, I can’t speak for them, but I do know that they had just set themselves an ambitious annual purchasing goal. To meet this goal, they were buying coffee from a number of different co-operatives in the region. I can only assume that their sudden insistence that the co-operatives work through AMSA was because it might be logistically easier for them to deal with only one exporter rather than many small co-operatives. Since AMSA is the largest exporter in Mexico, chances are that the two companies “speak the same language” and working with them might be more straightforward. Clearly direct communication with producer groups, in terms of language, cross-cultural issues, and access to fax, phones and e-mails, requires a commitment and investment of resources. (One which we think brings many rewards as well!)

As an intermediary in the supply chain, AMSA would now be receiving payment from the buyer… not so different from the situation the farmers were in for the long years before they formed their own co-operative and became part of the Fair Trade system. The farmers say that until this point, the relationship with the buyer, and its environmental partner operating on the ground, had always been a good one. However, their attempts to impose this new arrangement and the co-operatives’ ensuing refusal to become a “supplier” rather than a full partner, created considerable tension in the months before the relationship was officially broken. The farmers also claim that the staff of the environmental organization began engaging in “aggressive behaviors”; approaching CESMACH members individually to encourage them to abandon the co-operative and sell their coffee through AMSA.

I suppose from a strictly “business” point of view, the company wasn’t doing anything particularly wrong; they were merely acting in their own self-interest. But, if you remember the long history of the farmers and their many struggles to create their own co-operative, with their own entrepreneurial vision and social objectives, this action was tantamount to “neo-colonialism.” A Mexican coffee association bulletin, El Buen Café wrote the following about the situation:

“The strategy… consists in breaking the organizational structures of the small-scale producers, condemning them to be merely ‘suppliers’ of coffee, leaving the whole processing and exporting steps to intermediaries, in this case AMSA, the most powerful exporting company in Mexico.” Similarly, a Mexican journalist wrote in La Prensa Grafica, “The four co-operatives said these actions form part of a ‘neocolonial’ strategy whose goals are to create dependency on multinational companies and finish off the co-operatives’ organizational and administrative capacities.”

Fair Trade was created in acknowledgment of the fact that small-scale farmers will only be agents of their own development when they control their businesses and are not merely pickers and suppliers in an industry where the vast bulk of the profits go to everyone else in the long chain of intermediaries. Direct relationships were established between buyer and producer to eliminate the need for, and the abuses of, the middlemen. So the sad part of this story is that the farmers had to struggle once again not to be reduced to “mere suppliers.” The triumph is that despite the risk (and the tremendous balance of power against them), the farmers remained true to their convictions, were able to say “no” to a very large and powerful coffee company, and are still thriving today.